Unbiased Analysis of Today's Healthcare Issues

Publicly Provided Prevention Health Plan

Written By: Jason Shafrin - Jan• 15•09

Most physicians, public health officials and economists believe that most individuals do not receive sufficient levels of preventive care.  Only half of American adults receive all recommended screening and preventive care.

The Partnership for Prevention has a plan to increase preventive care utilization. The organization proposes introducing:

..federally funded insurance programs [that] would provide highly cost-effective clinical preventive services with no deductibles or co-pays, while Congress would provide incentives to states, health care providers and employers to deliver such services. Meanwhile, a stand-alone revenue source would be established to fund state and local efforts to create healthy environments and promote healthy lifestyles, while a Public Health Advisory Commission would be created to recommend how that funding should be allocated.

Is this a good idea?  There are benefits to this plan.  Individuals without health insurance would have access to some of these preventive measures.  The Vaccines for Children (VFC) program currently provides free vaccines to poor children, and this program has generally been seen as a success.

Overall, however, I do not endorse this plan.  Here is why:

  • Cost effectiveness: The idea is being presented as a cost saving initiative.  While effective preventive care can increase longevity and improve the quality of life, it often increases health care costs.
  • Carve-out problem.  Enacting a universal, government provided health care system may be a good or bad thing depending out your point of view.  However, a limited, carve-out program for preventive care will be…well…limited.  Let us say the prevention health plan covers mammograms.  If an uninsured individual receives a mammogram using the proposed program and finds a cancerous tumor what is the next step?  The prevention health program will not cover surgery so the uninsured individual will be left with bad news and, if they are poor, few options to treat the disease.  This will lead to…
  • Coverage creep.  In the example above, I anticipate an outcry for individuals from uninsured individuals who have breast cancer.  They will lead to an expansion of coverage to treatments that are less-cost effective.  Physicians will lobby to have certain treatments included in this national prevention health plan.  Thus, what may start out as a health plan which only targets cost-effective treatments, will likely expand into other areas.  For instance, the $700 billion bailout was targeted for financial firms only.  Unsurprisingly, politically powerful sectors (e.g., the auto industry) have been lobbying for their share of the pie.
  • Cost shifting.  Private insurance companies who currently offer preventive services will not be able to shift their costs to the public sector.  A profit-maximizing strategy is to shift as much cost to the public sector as possible.  Thus, insurance companies will try to categorize as much medical as possible under a “prevention-eligible” diagnostic code.
  • Paternalism.  The plan will also pay for health care targeted to reduce tobacco and alcohol use, improve the patient’s diet and increase the patient’s physical inactivity.  Most people know that using less drugs, exercising more and eating less will improve longevity.  I personally do not think that it is the government’s job to tell you how to live your life.  If you want a shorter life filled with more cheesecake, that should be left up to the individual.

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3 Comments

  1. Thanks for calling attention to Partnership for Prevention’s recent recommendations on prevention as part of the health reform debate. We’re glad you recognize some benefits, but I think a careful reading of our proposals will dispel some of the concerns you’ve raised.

    For one thing, we aren’t “introducing ‘federally funded insurance programs,’” but merely proposing changes in programs that are already established (e.g. Medicare, Medicaid, VA, etc.). We simply propose eliminating cost-sharing requirements (which research shows is a barrier) for high-value clinical prevention services in these existing programs. And because this proposal isn’t for new insurance programs, that should negate the concerns about coverage creep, carve-outs and cost-shifting.

    Secondly, we don’t claim our proposals are cost-saving, but they are cost-effective. There’s an important difference between the two. Health care costs money, whether it’s from a surgical procedure, a prescription drug, or from a preventive service. Cost-effective measures provide more value in terms of health benefits per dollar spent than other measures. Instead of singling out prevention for a requirement that it save money, we need to compare preventive measures with other forms of health care to see which ones provide the most value. And preventive measures seek to reduce the prevelance of chronic diseases that are driving health costs through the roof and that have increased out-of-pocket health expenses by 40 percent over the last decade.

    As for your statement that effective preventive care can increase longevity and improve the quality of life, we plead guilty as charged, and we think that’s a good thing. If living longer costs more, then surgeons and emergency room docs may also want to claim their share of the credit for that. Saving lives is, after all, a big reason for having a health care system, and I think we’d all agree that that premature death as a cost-savings strategy is bad politics, bad policy and bad economics (just ask the folks who lived through the Black Plague). The reasonable alternative is to identify and apply the treatments and preventive measures that provide the most value. Right now, 95 percent of medical spending goes to treatment while less than 5 percent goes to prevention. The results – a high-cost, low-yield health care system compared to other countries – suggest that this is not a proper balance.

    Regarding your concerns about paternalism, our proposals would not tell anyone how to live, but they would help people who want to make healthy choices be able to afford those choices.

    Corinne Husten
    Interim President
    Partnership for Prevention

  2. Greg Vachon says:

    Prevention makes sense for all the reasons outlined above. Health lifestyles can in fact be cost saving, depending upon how it is paid for. An interesting concept is to use incentives for preventive activities. This is similar to using negative taxes (earned income credit) and has worked in various setting including improving immunization rates in developing countries. Mexico is using the concept of cash incentives effectively in some areas. To induce competition and to have the market discover the best solution, the incentives ought to go directly to the person who has completed the preventive service (pap, mammogram, yearly blood pressure [as opposed to a yearly physical]) or has avoided the negative health measure (e.g. smoking, weight – things that are changeable and measurable). A certificate of compliance (mammogram completed in woman over 50) could result in direct cash transfer (let’s say $400 for a mammogram). Then sites could compete to most efficiently provide that service and process the $400 for the patient (like tax rebate facilities). The patient might get $100 back or might need to pay $50. It would depend on how efficiently the site could provide the services. Of course there would need to be regulation, but the structure would promote competition and efficiency.
    The incentives would increase costs, no doubt, as more cancers are found and more false positives are worked up. But, at least for woman over 50, there is little doubt that some women would be spared a death from breast cancer and at a cost that society has deemed is reasonable per life year saved. In regard to weight, a modest incentive could be paid for people to be in a healthy weight range who CHOOSE to participate in a health incentive program. People could be mailed a weigh-in date and go to certified weigh-in sites (CVS, Walgreens perhaps), and if they are in certain weight ranges for their height they would get a check for $50. That beats the heck out of sending everyone a $600 rebate check. Other wellness measures could be incented similarly.
    The point is not to subsidize the currently inefficient delivery of preventive services but rather to create a competitive market for their delivery at the right price point (the price at which the service is still cost effective per quality life year saved for instance).

  3. […] Healthcare Economist says that a government-sponsored prevention-only health plan has merit, but overall he can’t endorse it. […]

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